Your systems are secure, your software is up to date, and your team is trained to spot phishing attempts. It’s easy to feel confident in your cybersecurity—but that confidence can create risk if it leads to gaps in coverage.
Even well-protected businesses remain exposed to cyber incidents that can result in financial loss, operational disruption, and liability. Cyber liability insurance plays a critical role in protecting against these residual risks.
Key Takeaways
- Strong cybersecurity does not eliminate cyber risk exposure
- Ransomware, fraud, and system disruption can lead to significant losses
- Emerging threats like deepfakes and AI-driven phishing increase claim severity
- Cyber liability insurance helps cover recovery, legal, and interruption costs
- Coverage gaps can result in substantial out-of-pocket expenses
No matter how good your cybersecurity measures are, there are still risks. Cybercriminals are constantly adjusting their strategies and adopting new technologies to make their cyberattacks more successful, so cyber coverage remains a crucial part of any cybersecurity strategy. From an insurance perspective, these evolving threats increase both the frequency and severity of cyber-related claims.
Deepfake Fraud and Social Engineering Risks
Emails and text messages can be faked easily enough, but you might think you can trust information that you hear over the phone or see in a video. With modern deepfake technology, that’s no longer the case.
Scammers have used deepfake audio recordings for a few years now. In 2019, Gizmodo reported that fraudsters were able to impersonate a company’s CEO using deepfake audio. The scammers convinced a worker at the company to transfer $243,000.
Now scammers can even impersonate people in video calls. Reuters says a fraudster used a sophisticated deepfake and face-swapping technology to impersonate a target’s friend during a video call. The scammer convinced the target to transfer $622,000 to him.
As deepfake technology improves and becomes more readily available, these types of attacks will likely increase. These types of attacks often result in social engineering losses, which may be limited or excluded without properly structured cyber insurance coverage.
AI-Driven Phishing Increases Cyber Risk
Scammers often create phishing emails, text messages and websites to try to trick people into disclosing their personal information. Bad grammar and other mistakes can make the ruse obvious, but tools like ChatGPT may change this.
A CNET writer found that she was able to create phishing emails easily using ChatGPT, while Wired warns that cybercriminals can use ChatGPT and other large language models to run thousands of scams at the same time and in any language. Scammers will no longer be held back by language barriers or time constraints, and the number and sophistication of phishing attempts could skyrocket as a result. From a coverage standpoint, these attacks frequently trigger claims involving fraud, data breach, and business interruption.
Advanced Cyber Threats Increase Exposure
Hackers and their targets are in an arms race. As businesses implement better security protocols, such as multifactor authentication and biometric identification, hackers adopt better ways of getting around these measures.
According to Techopedia, hackers are now using AI and machine learning to gain access to accounts. They have many tools at their disposal, including AI-supported password-guessing and CAPTCHA-cracking and penetration testing tools that use machine learning. As attack methods evolve, businesses face increasing difficulty predicting and mitigating all potential loss scenarios.
Zero-Click Attacks and System Vulnerabilities
Many scams work by tricking the target into making a mistake, whether it’s clicking on a malicious link or giving the scammer requested information. However, some new cyberattacks do not require any action from the victim.
PC Magazine says zero-click attacks are hard to avoid because they exploit existing vulnerabilities in operating systems to circumvent the need for the victim to do anything. The cybercriminal simply needs to send the malware to your device, and even if you don’t click on anything, the malware exploits the vulnerability to gain access to your system. You may not know that anything has happened. These incidents can lead to significant first-party losses, even without user error, reinforcing the need for comprehensive coverage. Cyber liability insurance helps address this uncertainty by providing financial protection when new or unforeseen threats emerge.
Cyber Risk Is Constantly Evolving
Technology is advancing quickly. Right now, ChatGPT, deepfake technologies, AI and machine learning are giving hackers new ways to access systems. Next year, they might be using a new technology that hasn’t even been developed yet.
Cybersecurity is a journey, not a destination. As soon as you create a secure system, new vulnerabilities will emerge. Sometimes, you may be ahead of cybercriminals. Other times, they may be ahead of you. It’s an ongoing struggle, and it requires constant vigilance.
A Three-Pronged Approach to Cyber Risk Management
Although the cyber situation can seem bleak, businesses do not have to admit defeat. A three-pronged approach can help businesses control their cyber risks. From an insurance perspective, combining risk management with coverage is essential to reducing total loss exposure.
- Awareness. Many cyberattacks leverage social engineering to exploit human weaknesses. Businesses need to train all of their workers to be cyber savvy so they can avoid business email compromise schemes, phishing ploys, malicious links and other traps.
- Security. Computer systems need to be set up in accordance with current cyber best practices. This includes encryption and configurations that reduce access to systems, as well as secure networks and up-to-date programs.
- Insurance. Nothing is foolproof, so insurance is still valuable. If a cyberattack occurs, cyber insurance can help you recover from the attack.
Do You Need Cyber Insurance If You Already Have Strong Cybersecurity?
Many businesses assume that strong cybersecurity controls eliminate the need for cyber insurance. However, even well-defended systems can be compromised through human error, vendor vulnerabilities, or emerging attack methods.
Cyber liability insurance provides financial protection and response support when preventative measures fail, helping businesses manage both immediate losses and long-term liability.
Protect Your Business from Evolving Cyber Risk
Cyber threats continue to evolve, creating financial, operational, and liability exposure for businesses of all sizes. Even with strong cybersecurity controls, a single incident can result in significant loss if coverage is not properly structured.
Tangram Insurance Services helps organizations design cyber liability insurance programs that address real-world exposures, including ransomware, fraud, business interruption, and data breach response.
Explore our Cyber Insurance Program to learn how we can help you strengthen protection and control cyber risk.
